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Massachusetts Senate approves plan to reduce state personnel costs
April 16, 2015

BOSTON – The Massachusetts Senate on Wednesday voted to provide the executive branch with a set of tools to achieve payroll savings, including the continuation of a current hiring freeze, buyouts and retirement incentives, announced State Senator Benjamin B. Downing (D – Pittsfield). This early retirement incentive program bill offers options for the Executive Office of Administration and Finance to reduce state personnel costs by $325.1 million in gross savings, in order to make $171.9 million available in the Fiscal Year 2016 budget for other purposes.

The bill sets a cap of 4,500 executive department employees who are eligible to retire or resign and requires detailed reporting to the Legislature and State Retirement Board to ensure accountability and transparency during the implementation process.

Reporting requirements will allow the Legislature and State Retirement Board to monitor the number of employees retiring and through which mechanism, savings achieved and the impact on agency operations. The bill also directs the Administration to designate “critical” positions key to the mission of state agencies that would be exempt from staff reductions and “priority fill” positions that would be the first to be rehired during the backfill process.

The bill offers several tools for the Administration to use to reduce personnel costs, such as authorizing buyouts of targeted employees. Additionally, the Baker Administration’s current hiring freeze may be continued to achieve savings without the possible financial liability associated with a retirement incentive program.

The retirement incentive program would be open to executive department employees who are Group 1 members of the state retirement system and vested with a minimum of 20 years of service or are at least 55 years old on the date of retirement. Employees not funded from the state payroll, elected officials and certain other employees are not eligible for the program. The eligibility limits are intended to guarantee expected savings by giving the executive branch direct control over the backfill of positions.

Under the Senate’s bill, the application period would be from April 27 through May 29, 2015, with a retirement date of June 30, 2015.

To allow for sufficient knowledge transfer from departing employees, the bill allows retiring employees to be rehired as consultants for up to 90 days.

In March, the House of Representatives passed a similar bill establishing an employee retirement incentive program. A six member conference committee representing the Senate and House must now produce a compromise bill for final passage and the Governor’s signature.

 

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